NATIONAL

SENIOR CERTIFICATE

GRADE 11

NOVEMBER 2015

ECONOMICS P1

MARKS: 150

TIME: 2 hours

This question paper consists of 12 pages.

2 ECONOMICS P1 (EC/NOVEMBER 2015)

INSTRUCTIONS AND INFORMATION

1. Answer FOUR questions as follows:

SECTION A: COMPULSORY.
SECTION B: Answer any TWO questions in the ANSWER BOOK.
SECTION C: Answer any ONE question in the ANSWER BOOK.

2. Write the question number above each question.

3. Number the questions correctly according to the numbering system used in

this question paper.

4. Read the questions carefully and start each question on a NEW page.

5. Leave 2–3 lines between subsections of questions.

6. Answer questions in full sentences and ensure that the format and content of
your responses comply with the cognitive levels of the questions.

7. Write neatly and legibly.

8. Only the required number of questions will be marked in the order in which
they appear in the ANSWER BOOK.

9. You may use a non-programmable pocket calculator.

10. Use only a black or blue pen.

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(EC/NOVEMBER 2015) ECONOMICS P1 3

SECTION A (COMPULSORY)

QUESTION 1

1.1 Various possible options are provided as answers to the following questions.
Choose the most correct answer and only write (A, B or C) next to the
corresponding question number (1.1.1–1.1.8) in the ANSWER BOOK, for
example 1.1.9 C.

1.1.1 A person who bring the other factors of production together in an

efficient way.

A Consumer
B Civil servants
C Entrepreneur

1.1.2 To convert basic prices to market prices, taxes on products must

be ...

A deducted.
B added.
C multiplied.

1.1.3 In a centrally planned economy all problems are resolved by ...

A private individuals.
B the government.
C producers.

1.1.4 Eskom generates electricity in South Africa by mainly using ...

A water.
B wind.
C coal.

1.1.5 Is levied on gains earned on the sale of capital goods, for example
properties and shares:

A Transfer duties
B Capital gains tax
C Wealth taxes

1.1.6 An increase in the production of goods and services in a country over

a year in physical terms:

A Economic development
B Economic growth
C Investment

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4 ECONOMICS P1 (EC/NOVEMBER 2015)

1.1.7 People who are working less than they are capable of are ... employed.

A under
B more
C half-employed

1.1.8 Fiat money …

A has intrinsic value.

B is Kruger Rands.
C has value only because it is generally accepted as a medium of
exchange. (8 x 2) (16)

1.2 Choose the description from COLUMN B that matches an item in COLUMN A
Only write the correct letter (A–I) next to the corresponding question number
(1.2.1–1.2.8) in the ANSWER BOOK, for example 1.2.9 I.

COLUMN A COLUMN B
1.2.1 Economic rent A occurs when the values of all outputs of
all the enterprises in the economy are
merely added together

1.2.2 Double counting B given the best possible outcome within

a given set of circumstances

1.2.3 Optimum mix C financial assistance that need not be

repaid

1.2.4 Community services D the amount of money that a natural

resource earns over and above its
transfer earnings

1.2.5 Productivity E include protection, sanitation and water

1.2.6 Gini coefficient F a statistical measure used to express

the inequality of income distribution

1.2.7 Cash reserves G the amount of a bank assets that bank

is kept in the form of cash to meet day-
to-day withdrawals by its customers and
financial commitments

1.2.8 Grants H relationship between real output and

inputs

I the distribution of wealth among

countries of the world
(8 x 1) (8)

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(EC/NOVEMBER 2015) ECONOMICS P1 5

1.3 Give ONE concept for each of the following descriptions. Write only the
concepts next to the corresponding question number (1.3.1–1.3.6) in the
ANSWER BOOK.

1.3.1 The amount that the worker receives each day, each week or at the end
of a month

1.3.2 Goods that are used or destroyed in the process of being used

1.3.3 A government’s selling of more than 50% of the shares in its

enterprises, or other kinds of services entities, to the private sector

1.3.4 Implies an increase in the standard of living of the entire population

1.3.5 Are issued by consumers’ organisations and retail businesses, and

which give consumers access to credit

1.3.6 When a country’s total imports are more than its exports (6 x 1) (6)

TOTAL SECTION A: 30

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 6 ECONOMICS P1 (EC/NOVEMBER 2015)

SECTION B

Answer any TWO questions from this section.

QUESTION 2: MACRO ECONOMICS 40 MARKS – 20 MINUTES

2.1 2.1.1 Mention any TWO forms of community participation in local economic
planning and activities. (2 x 1) (2)

2.1.2 Explain the term Gross Domestic Product (GDP). (1 x 2) (2)

2.2 Study the table below and answer the questions that follow.
Key labour market variables 2001 to 2013 (March of each year)

2001 2003 2005 2007 2009 2011 2013

Working age 27 265 28 327 29 319 30 208 30 987 32 314 33 240
population
(15–64)
Not 10 690 11 819 12 823 12763 13 166 14 832 15 017
economically
active
Labour force 16 575 16 509 16 497 17 444 17 820 17 482 18 222
Employed 12 494 11 666 12 503 13 326 13 636 13 118 13 621
Unemployed 4 081 4 843 3 993 4 119 4 184 4 364 4 601
Unemployment 26,6 29,3 24,2 23,6 23,5 ? 25,2
rate
Absorption rate 45,8 41,2 42,6 44,1 44,0 40,6 41,0
Labour force 60,8 58,3 56,3 57,7 57,5 54,1 54,8
participation
[Source: Statistics South Africa]

2.2.1 Explain the term Not Economically Active. (2)

2.2.2 Calculate the unemployment rate for 2011. (2)

2.2.3 What trend do you observe in the working age population from the table? (2)

2.2.4 Mention any TWO factors which determine the quality of a labour force. (4)

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2.3 DATA RESPONSE

Study the picture below and answer the questions that follow.

2.3.1 Explain the term free market economy. (2)

2.3.2 What is the message depicted in the above picture? (2)

2.3.3 What motivates consumers and producers in a pure market economy? (2)

2.3.4 Mention any TWO advantages of a free market economy. (4)

2.4 Explain capital (intermediate) goods and services. (4 x 2) (8)

2.5 Briefly discuss efficiency in delivering social services in South Africa. (2 x 4) (8)
[40]

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8 ECONOMICS P1 (EC/NOVEMBER 2015)

QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 20 MINUTES

3.1 Answer the following questions.

3.1.1 Name any TWO factors that influence the income levels. (2 x 1) (2)

3.1.2 Why does the government intervene in the economy? (1 x 2) (2)

3.2 DATA RESPONSE

Study the extract below and answer the questions that follow.

SADC

SADC’s vision is that of a common future, a future within a regional community

that will ensure economic well-being, improvement of the standards of living
and quality of life, freedom and the social justice and peace and security for
the people of Southern Africa. This shared vision is anchored on the common
values and principles and the historical and cultural similarities that exist
between the people of Southern Africa.

[Source: www. Sadc.int]

3.2.1 Name any TWO countries that form part of the SADC. (2)

3.2.2 What does the abbreviation SADC stands for? (2)

3.2.3 Name any ONE objective of the vision of the SADC according to the
extract. (2)

3.2.4 List any TWO forms of economic integration and co-operation. (4)

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(EC/NOVEMBER 2015) ECONOMICS P1 9

3.3 Study the cartoon below and answer the questions that follow.

3.3.1 What is a bank failure? (2)

3.3.2 How does the South Africa Reserve Bank deal with bank failure? (2)

3.3.3 Why do you think the old man in the picture is a victim of bank failure? (2)

3.3.4 List any TWO reasons for bank failures. (2 x 2) (4)

3.4 Briefly discuss the aims of the monetary policy. (4 x 2) (8)

3.5 Analyse low standards of living and low levels of productivity as characteristics
of developing countries. (2 x 4) (8)
[40]

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10 ECONOMICS P1 (EC/NOVEMBER 2015)

QUESTION 4: MACRO ECONOMICS AND ECONOMIC PURSUITS

40 MARKS – 20 MINUTES

4.1 Answer the following questions.

4.1.1 List any TWO kinds of mobile telephone that are in use. (2 x 1) (2)

4.1.2 Explain the term economically marginalised group. (1 x 2) (2)

4.2 DATA RESPONSE

Study the table below and answer the questions that follow.

Real final consumption expenditure by household

Category 2012 2013

st nd
Year 1 Qrt 2 Qrt 3rd Qrt 4th Qrt Year
Durable 11,1 5,9 12,5 9,4 6,9 7,9
Semi-durable goods 6,2 7,6 8,5 7,1 3,1 6,7
Non-durable goods 2,7 2,4 2,7 0,5 0,2 2,2
Services 1,7 0,1 -2.1 0,1 1,7 0,3
Total 3,5 2,4 2,5 2,1 2,0 2,6
[Source: Quarterly Bulletin March 2014]

4.2.1 Define final consumption expenditure by household. (2)

4.2.2 Identify the categories on which the household spent most of their income
in 2012 and 2013. (2 x 1) (2)

4.2.3 Express your own opinion about the percentage of consumer expenditure
in the 4th quarter compared to previous quarters. (2)

4.2.4 Explain non-durable goods and give examples. (2 x 2) (4)

4.3 DATA RESPONSE

Study the extract below and answer the questions that follow.

SOUTH AFRICA – ‘TWO –THIRDS URBANISED’

Two thirds of South Africa’s population now live in urban areas, according to the
most recent survey of the country released by the South African Institute of Race
Relations in Johannesburg. “The proportion of people living in urban areas
increased from 52% in 1990 to 62% in 2011,” the Institute said in a statement.
The share of those living in rural areas dropped from 48% to 38% over the same
period. It is expected that Africa’s rate of urbanisation will have overtaken Asia’s
by 2030. South Africa’s population grew by 15,5%, or almost 7 million people, in
the space of 10 years to reach a total of 51,7 million in 2011, according to the
country’s latest national census.
[Source: www southafrica. info]

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(EC/NOVEMBER 2015) ECONOMICS P1 11

4.3.1 Define the term urbanisation. (2)

4.3.2 What are the reasons for people to move to urban areas?
Mention any TWO reasons. (4)

4.3.3 What does the level of urbanisation in a country indicate? (2)

4.3.4 Mention any ONE problem created by urbanisation in cities. (2)

4.4 Briefly explain any TWO factors that influence the profit of an entrepreneur.
(2 x 4) (8)

4.5 Discuss the objectives of NEPAD. (4 x 2) (8)

[40]

TOTAL SECTION B: 80

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12 ECONOMICS P1 (EC/NOVEMBER 2015)

SECTION C

Answer only ONE of the two questions in this section in the ANSWER BOOK.

STRUCTURE OF THE ESSAY MARK ALLOCATION

Introduction Max. 2
Body
Main part: Discuss in detail/In depth discussion/
Max. 26
Examine/Critically discuss/Analyse/Compare/Evaluate/
Distinguish/Explain/Assess/Debate
Additional part: Give own opinion/Critically
discuss/Evaluate/Critically evaluate/Draw a graph and
Max. 10
explain/Use the graph given and explain/Compare/
Explain/Distinguish/Interpret/Briefly debate
Conclusion Max. 2
TOTAL 40

QUESTION 5: MACRO ECONOMICS 40 MARKS – 35 MINUTES

5.1 Economists divide the economy into three sectors: primary, secondary and
tertiary sector. The role played by each sector changes, as the economy
becomes more developed.

Discuss the economic importance of primary sector in the economy.

Critically evaluate the programmes that try to redress the issue of land in
South Africa. [40]

QUESTION 6: ECONOMICS PURSUITS 40 MARKS – 35 MINUTES

6.1 One of the macroeconomic objectives of government is to ensure economic

equity in the country. This means that the government must introduce
measures to reduce the size of the income gap between rich and poor.

Discuss and evaluate the methods used by the government to

redistribute income and wealth.
Briefly explain the reasons for the unequal distribution of income. [40]

TOTAL SECTION C: 40
GRAND TOTAL: 150

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 NATIONAL
SENIOR CERTIFICATE

GRADE 11

NOVEMBER 2015

ECONOMICS P1
MEMORANDUM

MARKS: 150

This memorandum consists of 12 pages.

2 ECONOMICS P1 (EC/NOVEMBER 2015)

SECTION A: (COMPULSORY)

QUESTION 1

1.1 MULTIPLE-CHOICE QUESTION

1.1.1 C Entrepreneur
1.1.2 B added
1.1.3 B government
1.1.4 C coal
1.1.5 B Capital gains tax
1.1.6 B Economic growth
1.1.7 A underemployed
1.1.8 C has value only because it is generally accepted as a
medium of exchange. (8 x 2) (16)

1.2 MATCHING ITEMS

1.2.1 D the amount of money that a natural resource earns over

and above its transfer earnings
1.2.2 A occurs when the values of all outputs of all the enterprises
in the economy are merely added together
1.2.3 B given the best possible outcome within a given set of
circumstances
1.2.4 E include protection, sanitation and water
1.2.5 H relationship between input and output
1.2.6 F a statistical measure used to express the inequality of
income distribution
1.2.7 G the amount of a bank assets that is kept in the form of cash
to meet day-to-day withdrawals by its customers and
financial commitments
1.2.8 C financial assistance that need not be repaid (8 x 1) (8)

1.3 GIVE ONE CONCEPT

1.3.1 Nominal wage

1.3.2 Non-durable goods
1.3.3 Privatisation
1.3.4 Economic development
1.3.5 Consumer cards
1.3.6 Trade deficit (6 x 1) (6)

TOTAL SECTION A: 30

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(EC/NOVEMBER 2015) ECONOMICS P1 3

SECTION B (Answer any THREE questions from this section.)

QUESTION 2: MACRO ECONOMICS

2.1 2.1.1 Individuals have to use their constitutional right to vote for the
political party that will pursue objectives that are similar to their
own.
They have to participate in the official structures that are in place,
such as councils, committees and forums.
They may make appeals through the media, civil society
organisations such as ratepayers association, petitions and
authorised demonstrations and pickets. (Any 2 x 1) (2)

2.1.2 The total value of all final goods and services produced within the
borders of a country in a particular period, usually one year. (1 x 2) (2)

2.2 DATA RESPONSE

2.2.1 Are people that are not suitable for work.

People over the age of 65.
Those under the age of 15 years old. (Any relevant answer)
(Any 1 x 2) (2)

2.2.2 4 364/17 482 x 100 = 25% or 24,9% (2)

2.2.3 There is an increase/increasing. (2)

2.2.4 School education

Work related training
Health (Any 2 x 2) (4)

2.3 DATA RESPONSE

2.3.1 Is an economy that uses supply and demand to answer the questions
what, how and for whom to produce goods and services. (2)

2.3.2 Individuals make their own decisions and have the freedom of choice
without being dictated by the government.
The factors of production are controlled and owned privately.
(Any relevant answer) (Any 1 x 2) (2)

2.3.3 Self-interest or private gain. (2)

2.3.4 It works automatically

Innovation
Choice
Economic growth
Distribution of income and wealth
Efficiency (Any 2 x 2) (4)

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4 ECONOMICS P1 (EC/NOVEMBER 2015)

2.4 Explain capital (intermediate) goods and services.

These goods help to manufacture other goods and are not directly use
up.
Examples are machinery and tools that help to produce.
Are bought by manufactures of goods and services.
Also include goods and services that are not fully finished or have to reach
the final stage for it to be consumed.
Still requires other processing to make it a final finished product.
(Any 4 x 2) (8)

2.5 Briefly discuss efficiency in the delivery of social services in South Africa.

Education and training

Education is the single largest item of expenditure in the budget.
It includes basic education in schools, FET colleges and universities, to
increase literacy.

Healthcare
To provide basic health services to the community as a whole.
Demand for healthcare is likely to increase as more patients have to receive
treatment for HIV/Aids and TB.

The housing function.

Includes the provision of housing for the needy.

Social security
Tries to meet the basic needs of some individuals.
It also protects and promotes the rights of vulnerable groups such as
children, older persons, woman and people with disabilities.

Public order and safety

Physical protection includes the defence, police, criminal justice system and
prison services.
They are collective services.
The quality and efficiency of these services make societies and individuals
feel safe or unsafe, and secure or insecure. (2 x 4) (8)
[40]

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(EC/NOVEMBER 2015) ECONOMICS P1 5

QUESTION 3: ECONOMIC PURSUITS

3.1 3.1.1 Level of education and tertiary qualifications.

Regional location with higher incomes in urban areas compared to
rural areas.
Economic sector with primary sector earnings being lower than the
tertiary sector earnings.
Extent employment equity where income differences are due to race
and gender discrimination.
(Any relevant answer.) (Any 2 x 1) (2)

3.1.2 To strengthen the functioning of markets.

To promote economic growth and development.
To ensure a redistribution of income and wealth. (Any 1 x 2) (2)

3.2 DATA RESPONSE

3.2.1 Angola
Botswana
DRC
Lesotho
Malawi
Mauritius
Mozambique
Namibia
RSA
Seychelles
Swaziland
Tanzania
Zambia
Zimbabwe
Madagascar (Any 2 x 1) (2)

3.2.2 South African Development Community (2)

3.2.3 Economic well-being

Improvement of standard of living and quality of life.
Freedom and social justice and peace and security for the people of
Southern Africa. (Any 1 x 2) (2)

3.2.4 Free trade area

Customs Union
Common market
Economic Union
Monetary union (Any 2 x 2) (4)

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6 ECONOMICS P1 (EC/NOVEMBER 2015)

3.3 DATA RESPONSE

3.3.1 A bank failure occurs when a bank is unable to meet the cash demands
of its customers. (2)

3.3.2 SARB intervenes to prevent a loss of confidence in the banking

sector. The SARB guarantees that depositors will not lose the
money that they deposited in a registered bank. (2)

3.3.3 Lost the money.

Lose investment share in the bank.
Lose confidence in the banking system.
Could lose his home. (Any relevant answer) (Any 1 x 2) (2)

3.3.4 Poor management

Poor credit control
Bad debt (Any 2 x 2) (4)

3.4 Briefly discuss the aims of monetary policy

Protecting the currency value ensuring economic growth in the country.
Controlling money supply and levels of credit advantageous to consumers
and businesses.
Managing conditions that are stable in the financial industry.
Establishment of interest rates and promote investments and savings but
also should be reasonable to those borrowing money.
Exchange rates should be attained that are advantageous to the
country. (4 x 2)
3.5 Analyse the standard of living and low levels of productivity as
characteristics of developing countries.

Low standard of living

Standards of living are measured in terms of per capita GNI, or in terms of
real per capita GNI if measured over time is involved.
The standard of living in developing countries is generally low, mainly due to
the low income levels.
Resulted in poverty, inadequate housing, poor health, limited education, high
infant mortality rates and low life expectancy.
People struggle to meet their basic needs and do not fulfil their potential.
(2 x 2) (4)

Low levels of productivity

Productivity levels are low due to the lack of expertise especially in key areas
like sciences and technology.
Other conditions such as poor health, poor nutrition and lack of innovation
are also common. (2 x 2) (4)
[40]

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QUESTION 4: MACRO ECONOMICS AND ECONOMIC PURSUITS

4.1 4.1.1 Cellular telephone

Satellite telephone
Radio telephone (Any relevant answer accepted) (2 x 1) (2)

4.1.2 Are people who are excluded from meaningful participation in society
and whose needs are largely not addressed by the authorities.
(Any relevant answer) (1 x 2) (2)

4.2 DATA RESPONSE

4.2.1 Is the total expenditure by resident households and private non-profit

institutions serving households on new final goods and services. (2)

4.2.2 Durable goods

Semi-durable goods (2 x 1) (2)

4.2.3 Increase in a slightly slower pace/decrease.

(Any relevant answer acceptable) (2)

4.2.4 Non-durable goods – are consumed or destroyed in the process of

being used (consumed).
Examples – food, beverages and tobacco, household fuel, power and
water. (Any relevant example accepted.) (2 x 2) (4)

4.3 DATA RESPONSE

4.3.1 Urbanisation – is the movement of people from rural areas to urban

areas. (Any relevant answer acceptable) (2)

4.3.2 Higher economic growth in urban areas attracting people to search

for employment.
For better education.
Better health care services.
Visit family. (Any relevant answer) (Any 2 x 2) (4)

4.3.3 Level of development (2)

4.3.4 Deficient infrastructure – shortage of housing, schools, hospitals,

water, and power suppliers.
Overcrowding – transport problems and traffic congestion.
Environmental damage by development of informal housing.
High unemployment (Any relevant answer) (Any 1 x 2) (2)

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8 ECONOMICS P1 (EC/NOVEMBER 2015)

4.4 Briefly explain factors that influence the profit of an entrepreneur.

The skills of the entrepreneur: Entrepreneurs who can control costs,

produce efficiently and estimate their prices and sales correctly,
are likely to have higher profits than those who lack similar skills. They are
competent.

Production processes and techniques

Entrepreneurs need to decide on the production methods they are going to
utilise.
Decisions have to be taken on whether they are going to produce on a large
scale or produce when they receive an order.
The machinery used for the production of the goods will determine the
production costs as well as the prices of the products.

The demand for the product

A demand for the products impacts on profit. If the demand for the product
is high, sales generated will increase, the profits in turn will be high and vice
versa. (Any 2 x 4) (8)

4.5 Discuss the objectives of NEPAD (8)

To promote sustainability growth and development in African countries.

Prevent Africa being marginalised and develop its ability to compete in global
markets
Alleviate poverty by addressing backlogs in service delivery.
Fast track the empowerment of woman.
Achieve the Millennium Development Goals (Any 4 x 2) (8)
[40]

TOTAL SECTION B: 80

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(EC/NOVEMBER 2015) ECONOMICS P1 9

SECTION C

Answer any one of the TWO questions from this section in the ANSWER BOOK.

STRUCTURE OF THE ESSAY MARK ALLOCATION

Introduction Max. 2
Body: Max. 26
Main part: Discuss in detail/In depth discussion/
Examine/Critically discuss/Analyse/Compare/
Evaluate/Distinguish/Explain/Assess/Debate
Additional part: Give own opinion/Critically Max.10
discuss/Evaluate/Critically evaluate/Draw a graph and
explain/Use the graph given and explain/Compare/
Explain/Distinguish/Interpret/Briefly debate
Conclusion Max .2
TOTAL 40

QUESTION 5

Discuss the economic importance of primary sector in the economy

Critically evaluate the programmes that try to redress the issue of land in South
Africa.

INTRODUCTION

The primary sector consist of all economic activities that are a first step in the
production process, for example mining, farming, forestry and fishing, to produce
primary products.
(Any relevant introduction accepted) Max. 2 (3)

BODY

Importance of primary sector

Provides food and minerals: Some agricultural products we import.
South Africa is almost self-reliant in minerals besides crude oil and other oil
products that need to be imported.
Earns foreign exchange by exports, which in turn pays for the imports of other
products.
Trains workers and creates job opportunities
Workers need to be trained to use the machinery.
Job opportunities are created in the mining industry.
Agriculture is an important employer for rural people, although the numbers have
reduced in recent years.
Provision of raw material for secondary industries
Fishing, mining and forestry play a vital role in the expansion and establishment of
the secondary industries in South Africa.
Contribution to GDP
Due to the fall in the contribution of the primary sector to the GDP, it is vital that its
role of job creation still exist.

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10 ECONOMICS P1 (EC/NOVEMBER 2015)

Source of capital formation

The primary sector needs large amounts of capital to produce goods.
Foreign investment plays a vital role in the expansion of these industries.
Stimulation of research and development
In the primary sector there are research institutions that conduct research into
methods of boosting productivity and quality.
Source of state income
In this sector the SARS receives taxes from all industries.
Gold mining companies pay extra taxes, which form an important source of state
revenue.
Positive influence on infrastructure
The development of agricultural regions and the discovery of minerals played an
important part in the country. Max. 26
(If only listed max. 9 marks)

ADDITIONAL PART
Briefly highlight the programmes that try to redress the issue of land in South
Africa

Land Restitution Programme

The purpose of the programme is to assess the validity of claims, restore land or
pay financial compensation to the claimants.
People who were dispossessed of their land as a result of racially discriminatory
laws and practices.
Land Redistribution Programme
The purpose to provide previously disadvantaged South Africans with access to
agricultural land.
The government originally aimed to redistribute 30% of South Africa‘s agricultural
land by 2014.
However it conceded in 2010 that the target would not be met by 2014 and 2025
seemed to be a more realistic date.
The emphasis has shifted from faster redistribution of land to more support for
settled beneficiaries. Max. 10
(If only listed max. 2 marks)

CONCLUSION

Primary sector has a very important role as it has provided people with food and raw
materials since ancient times. Max. 2
(Any relevant conclusion accepted)

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(EC/NOVEMBER 2015) ECONOMICS P1 11

QUESTION 6: ECONOMIC PURSUITS

Discuss and evaluate the methods used by the government to redistribute

income and wealth.
Briefly explain the reasons for the uneven distribution of income.

INTRODUCTION
One of the macroeconomic objectives of the government is to ensure economic
equity in the country.
Therefore, the government must introduce measures to reduce the size of the
income gap between the rich and the poor.
(Any relevant introduction) Max. 3

BODY

Redistribution method

Taxation
Taxation is one tool used by government to redistribute income.
Most governments use a progressive tax system to redistribute income.
In terms of the progressive tax, those who earn more pay more tax.
The additional income generated by the change in the tax rate, can be used to
finance social security programmes.
In this way the government redistributes income from the rich to the poor.

Social security
Government uses revenue from taxation to pay for its social security
programmes.
Transfer payments such as old-age pensions and disability grants are paid out
of tax revenue.
The government also provide non-cash benefits such as food parcels, free
education and free medical services to the poor.
These benefits help to improve the standard of living of the low income groups
and reduce the inequality gap

Minimum wage
The government can impose a minimum wage requirement.
No employer is allowed is allowed to pay his workers a wage lower than a
certain minimum
This is to ensure that workers meet at least the minimum standard of living.

Redress policies
There are a number of policies that have been implemented by the South
African government to redress the inequalities of the past.
A variety of policies have since been introduced to empower these previously
disadvantaged groups.

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12 ECONOMICS P1 (EC/NOVEMBER 2015)

Black Economic Empowerment

BEE is a government intervention policy that was introduced in 1996 to address
the inequalities of the past. This act provides the foundation for the
transformation of the South African economy so that black people who own and
manage and control the country’s economy can increase significantly and
income inequalities will decrease substantially.

Land restitution and land redistribution

The purpose is to return land to those who lost it as a result of racially
discriminatory laws and practices.
Land redistribution focuses on land of residential and productive use.
It is based on a willing-buyer willing-seller-principle.
Government aims to redistribute 30% of the country’s agricultural land to
previously disadvantaged people. Land is a major wealth asset if properly used.

Property subsidies
Properties are used to help beneficiaries acquire ownership of fixed residential
property.
The government housing subsidy scheme provides six funding options to all
eligible people earning less than R3 500 per month.
The subsidy may also be used to supplement loans from banks.

ADDITIONAL PART
Briefly explain reasons for uneven distribution of income.

Unequal holdings of wealth – As wealth generates income in the form of profits,

interest and dividends, differentials in wealth cause differences in income.
Differences in the composition of households – Some households are big
and others are small.
Differences in skills and qualifications – Those with advanced skills and
qualifications are likely to earn higher incomes.
Discrimination – The income of some groups is adversely affected by
discrimination in terms of employment opportunities, pay and promotion
chances. (Any 5 x 2) (10)
(If only listed max. 4 marks)

CONCLUSION

In South Africa, economic redress is applied to improve the standard of living of all
people. This is done by improving everyone’s access to economic resources
through equal opportunities. Max. 2
(Any relevant conclusion accepted) [40]

TOTAL SECTION C: 40
GRAND TOTAL: 150

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